State high court to weigh in on compensating landowners (UPDATE)

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The state Supreme Court is reviewing a lawsuit that Wisconsin Department of Transportation representatives say could set a dangerous precedent for compensating landowners who lose property to construction projects.

The owner of a shopping center, Port Washington-based 118th Street Kenosha LLC, filed the lawsuit in 2011 in Kenosha County Circuit Court. According to court documents, the dispute stems from the reconstruction of Highway 50 at Interstate 94 in Kenosha, a project that included moving a section of 118th Avenue and eliminating a driveway to the shopping center at 7300 118th Ave.

The center has another driveway, which connects to 74th Place, and WisDOT built a second entrance to that same road as part of the reconstruction project.

The state did not compensate the property owner for the loss of the entrance to 118th Avenue.

But an appraiser hired by 118th Street Kenosha determined the reconstruction unreasonably hindered access to the center, according to court documents, and caused the property’s fair market value to drop by at least $400,000.

“The proof of the loss of value caused by the (project) is undisputed and dramatic,” according to court documents filed by 118th Street Kenosha.

The company sued for compensation, but WisDOT argued the loss is not the state’s problem.

A Kenosha County Circuit judge dismissed the case, but an appeals court sided with 118th Street Kenosha. The state Supreme Court in March agreed to take the case.

One of the points WisDOT asked the Supreme Court to explore is whether a property owner is entitled to damages when the state exercises its police power and moves a highway. Police power is the state’s right to use eminent domain to acquire private property, such as for a public road project.

The state does not have to pay, according to WisDOT’s brief to the court, “when direct access to a highway is denied pursuant to a police power where other access is given or otherwise exists.”

The two driveways, the state claimed, represent that other access.

A copy of 118th Street Kenosha’s response brief, due Wednesday, could not be obtained Wednesday afternoon.

According to WisDOT’s brief, the appeals court’s failure to deal with the state’s claim of police power “implies that there are situations where the state must compensate an abutting landowner when the highway abutting their property is relocated – even though there was no taking of land and the property remains accessible from another preexisting driveway.”

According to WisDOT’s brief, that implication would result in a much broader understanding of when the agency’s acquiring property requires compensating landowners, such as when a highway bypass is built and a former road is demolished.

That type of understanding, WisDOT representatives argued, “is not a feasible or reasonable interpretation of the law.”

The state Supreme Court, according to WisDOT’s brief, also should explore the proper way to determine how much to pay a landowner in compensation for a temporary, limited easement.

When WisDOT built the second driveway to 74th Place, it took such an easement on the parcel to accommodate the project and awarded the property owner damages for the inconvenience, according to court documents, but the property owner argued the compensation should have been higher.

WisDOT also asked the court to consider whether a property owner can challenge the amount of compensation for such an easement and seek additional money for “alleged permanent damages caused by a different, independent state action.” That independent action was WisDOT eliminating the 118th Avenue driveway.

WisDOT has argued that a property owner cannot attempt to increase compensation for one action, such as building the second 74th Place driveway, by roping in inconveniences caused by another, such as eliminating the 118th Avenue driveway.

The Kenosha County Circuit judge who initially heard the case agreed and excluded evidence 118th Street Kenosha had intended to use to prove harm caused by the elimination of the driveway. But the 2nd District of the State of Wisconsin Court of Appeals found WisDOT’s “argument ignores reality.” Follow @bkevit